Tuesday, February 23, 2010

Yes, it’s a real word. And it means exactly what logic would suggest it does.

I was just editing an article that mentioned a book someone published in the 1970s, and it said that the author “had hitherto been regarded as an expert”. Clearly wrong, given the tense, but I didn’t know what was right. It struck me that “thitherto” would be ideal, but surely that couldn’t be a real word! I was about to rephrase the whole thing when I decided I might as well look it up, just on the offchance.

Moral of the story: follow your instincts.

(Next week: the tragic tale of the incompetent seductress who went around sporting a go-thither look.)

Monday, February 22, 2010

It shows that Gordon Brown’s decision to sell a lot of the UK gold reserves in 1999 (when the price was low) has left the Treasury about $10 billion worse off. Oh, and that Geoffrey Howe’s decision not to sell gold in 1979 (when the price was high) has left us about $35bn worse off.

Sunday, February 21, 2010

KGM: Have you ever hit anyone?GB: I have never hit anybody in my life.KGM: You know this is all what's being said…GB: Let me just say absolutely clearly, so that there is no misunderstanding about that, I have never, never hit anybody in my life.KGM: Or shoved them?GB: No, I don't do these sorts of things.

It’s extraordinary for a Prime Minister to be in the position of making such a denial. But not completely without precedent. Watching it, my mind was cast back to 17 November 1973:

In all of my years of public life, I have never obstructed justice. And I think, too, that I can say that in my years of public life that I welcome this kind of examination, because people have got to know whether or not their President is a crook. Well, I'm not a crook. I've earned everything I've got.

I don’t know how Nixon’s denial was seen at the time, but in retrospect it has become one of the defining moments in his disgrace.

Is Brown’s “never hit anybody in my life” in the same ball park?

Probably not. Guru-Murthy may have inadvertently done Brown a huge favour in asking too strong a question. Andrew Rawnsley’s book doesn’t contain any allegations that Brown “hit” anybody. The nearest is that Brown “roughly shoved” someone aside. While hitting is unambiguous – either you wholly deliberately strike someone with your hand or no such thing happens – what a “rough shove” amounts to is unclear both physically and in terms of intention.

But by airing the notion of Brown’s having hit sometime, Guru-Murthy has drawn attention away from the actual allegations and also made them seem less serious by contrast (Brown also denied any shoving, but that’s barely been noticed).

NB I generally respect Rawnsley’s work, and while his explanation of how he decided whether things he was told were “utterly reliable accounts… from impeccable sources” or not is basically empty, I can quite believe that Brown has a nasty temper on him and that he can be terrible to work for.

These three letters variously advocate reducing the deficit at a rate of mumble mumble mumble, by means of cutting spending on mumble mumble mumble and raising taxes on mumble mumble mumble. We fear that each of these positions is dangerously misguided and negligently vague.

We wish to put on record that if we are to bring the deficit down in a way that maintains market confidence in the public finances while safeguarding the recovery, and neither raising taxes too punitively nor harming essential public services, the government must take steps to mumble mumble mumble. Encouragingly, all three main parties seem to be moving towards this view.

It is sometimes said that economics is not an exact science, but we are so confident of our recommendations that we are even using a first-class stamp to post this letter.

Thursday, February 18, 2010

Prime Minister Gordon Brown will unveil the slogan of Labour's general election campaign in a speech at the weekend.

Announcing the fact that you’re going to be announcing your new slogan is dumb. It draws attention to the fact that you’re engaging in PR without giving you any of the benefit of that PR actually happening yet. Although it’s debatable how much use slogans really are – especially if they come attached to posters.

I’ve been poking deeply idle fun at the Tories lately, so maybe I should give my own side a few prods.

What, given Labour’s unhappy position in the polls, will this mystery slogan be?

Better the devil you know. Oh, and we’re introducing a new brimstone tax

We definitely won’t dash your high expectations

Nobody likes us, we don’t care

Going through the motions

Won’t the look on Cameron’s face be priceless if he loses?

I hadn’t abolished boom and bust, but I promise I will scrap Horne and Corden

Governing over the next few years will be horrible – vent your anger by making me do it

If you vote me out, I’ll write my memoirs. And then I’ll come round each of your houses and read you lengthy extracts

Tuesday, February 16, 2010

Update 17/2: A couple more. I've had to do these myself from scratch, using Word, Paint and some sneaky screengrabbing (no Photoshop skillz), so they're a bit amateurish - but I'm all about the concept...

Saturday, February 13, 2010

The UK government is less dependent on the bond market, and less affected by a rise in borrowing costs, than other states with smaller deficits.

Governments borrow by selling bonds. These bonds pay out yields each year (the interest rate) and they have an expiry date, at which time the original capital is returned to the buyer.

So the amount of bonds a government needs to sell in any year depends on: (a) the amount of new borrowing plus (b) the amount of maturing bonds that need replacing. Longer debt maturity means that (b) will be smaller.

Stephanie Flanders notes that “the average maturity of UK sovereign debt is 14 years. In the US, it's about four years. In France and Germany it's six or seven. In Greece, it's even lower… That makes an enormous difference to the amount of gilts we need to ask the debt markets to buy in a given year.”

In 2010, the budget deficits of Germany, France and Italy will be lower than the UK’s. But in terms of the bonds to be issued this year, Germany will be needing about 386bn euros, France 454bn, Italy 393bn and the UK 279bn.

It’s still a lot, but it’s also a lot less than these other countries.

The longer maturity of UK public debt also means, as Flanders explains, that an increase in the yields payable on new bonds will have a smaller effect on the total cost of servicing national debt.

We in the UK are right to be worried about our deficit. But the idea that we face a ‘debt crisis’ notably worse than other countries looks harder to sustain.

Update 18/3: I saw this nice chart from the Economist, illustrating how much longer-dated UK gilts are than other countries’.

Tuesday, February 09, 2010

Conservative leader David Cameron has laid the blame for the parliamentary expenses scandal squarely with Gordon Brown. “It is a measure of Labour’s Debt Crisis that even I could be bamboozled into claiming a load of money for the mortgage on my second home. Or possibly my third. Whatever.

“And the fact that I kept claiming for this even after I had started demanding the system be reformed just shows how badly Labour’s Age of Irresponsibility has broken our society.”

Meanwhile, Cabinet papers leaked to the Chilcot Inquiry revealed that Brown himself may have been involved in planting the unruly wisteria that so expensively besmirched Cameron’s beautiful home. Cameron said that there would be “no limit to the amount I would claim on expenses to clear him out. Gordon Brown cannot reform the institution because he is the institution. Whereas under the Conservatives, l’état, ca sera moi.”

“How Gordon Brown can claim to be a reformer with a straight face I just don’t know,” he added, hardly smirking at all.

The world scientific community yesterday confessed that so-called ‘climate change’ was a cruel trick that they had dreamed up to make us suffer. “It was at a party – or rather, it was during a party that we hadn’t been invited to. Again,” said a spokesprofessor. “We decided to invent reams of ‘evidence’ for a phenomenon that didn’t exist, just to confuse, frighten and annoy people.”

Further frauds have also emerged. An editorial in the Journal of Scientificality today confesses: “We also made evolution up for a laugh, just to see the looks on religious people’s faces. We didn’t expect anyone would actually believe it!” Other newly admitted hoaxes include the germ theory of disease, plate tectonics and gravity.

Monday, February 08, 2010

Giles Wilkes, the multitalented git, has composed a really rather excellent poem about quantitative easing, ‘The ballad of Mervyn’s shovel’. Paul Cotterill, the sly dog, has responded with a limerick of his own on the subject and an invitation to submit similarly themed poems.

I cannot resist. Bear in mind that Giles has an unfair advantage in that he actually understands QE, whereas I’ve had to pick up the gist based largely on blog posts by him and others…

Sing a song of £200 billion

Mervyn King was in his counting house, counting out our money;It didn’t take him very long, a fact he deemed most funny.“To return our stagnant nation to a land of milk and honey,I must make things more liquid – or at least, a bit more runny.”

And so he set off to create two hundred billion nicker,Enough to buy the whole wide world a bathtub full of liquorThough rather than buy fripperies he thought that he would pick aDuller option: public debt. But now here’s the real kicker:

“The printing press – a minting mess – will debauch our fair pound,”Said monetarist sceptics who were swarming all around.“The value of dear sterling will collapse beneath the groundAnd an explosion of inflation will astonish and astound.”

But King replied: “You dolts, it’s not a literal printing press;I do it electronically, by clicking here on ‘Yes’.And as for sterling, well it is now really more or lessWhere it was back when we started – so no big deal, I guess.”

Now other critics did retort: “It’s no big deal, indeed,For far too little’s changed vis-à-vis circulation speedOf money; banks are hoarding what they fear that they might need,So there’s precious little here on which recovery could feed.”

Yet assets boomed: the FTSE grew from suckling at King’s teat,The once-tortured housing market had all expectations beat,Estate agents were dancing in the (up-and-coming) street,And the Treasury found buyers for all the gilts it could secrete.

Then QE stopped – not with a bang nor whimper, just a grumbleAbout its consequences, an impenetrable jumble;Some feared that its reversal could provoke another stumble,And King concluded: “I predict that (mumble mumble mumble).”

Also, just for good measure, a limerick:

The Old Lady was most displeasedThat credit was painfully squeezedShe made billions from noughtAnd yet I must reportMy own bank balance is uneased

Saturday, February 06, 2010

BAE, which had bunged a load of money to a couple of governments so that it could make a load more money without any questions being asked, has now bunged a load of money to a couple of governments so that it can go on making a load more money without any questions being asked.

Thursday, February 04, 2010

Yes, I know, the concept is hard to grasp. Think of them as being like blogs, but with a subject matter other than politics, and you may start to get the idea. Anyway, I want to read stuff outside my usual field of obsession. I want to read interesting people who have funny, insightful, articulate, sad, angry, delightful, unexpected, thought-provoking things to say about, well, life. And, if you please, I’d like your help in finding them.

Wednesday, February 03, 2010

Now, I’m sure it’s meant to be pronounced ‘Rah-pess-co’ and not, you know, the other way, the alarming way, the forehead-slappingly stupid way. And I’m sure they’re a perfectly reputable company run and staffed by perfectly decent people.

But, taking into account that the name can seem a tad iffy to an English-speaking audience, the images and headings on their website makes me mildly concerned about how much common sense their branding people have:

Yes, I know, branding people are contractually required to have the common sense sucked out of them with a special machine when they start work. But even so… ‘punching’?

And what the hell message is the ‘stapling’ woman supposed to be conveying – ‘Well, now I’ve attached one piece of paper to another, I’ll just roll around on this bed that I happen to have in the office. Mmm, they’re attached so firmly…’

A very good piece on Radio 4’s Today programme: BBC Home Editor Mark Easton looks into how the Tories are using official statistics on violent crime to apparently show that there’s been a big rise recently.

The snag is that the official sources make crystal clear that the way the figures are compiled changed significantly in 2002, resulting in an artificial increase in the numbers. This “has rendered direct numerical comparisons with pre 2002/03 levels inaccurate” – according to BBC pinko former Tory leader Iain Duncan Smith.

The police are also objecting to the scaremongering way the Tories are using these stats:

In Milton Keynes, local [Tory] MP Mark Lancaster's office put out a statement last week claiming that there were 6,015 "violent attacks" in the town last year, reflecting a 236% increase over the past decade. …Milton Keynes sounds like Dodge City. That's a "violent attack" every 90 minutes.However, according to the Milton Keynes Citizen newspaper, the town's police says that the statistics are "extremely misleading".Local commander Nikki Ross told the local paper that the figure includes "everything from public order offences, to harassment, to allowing a dog to be out of control in a public place"."The actual number of people who were victims of serious violence was 81," she said. The point here is that the phrase "violent attacks" does not equate directly with the crime category "violence against the person". For instance, if someone swears at you in the street and you complain to the police about it, that incident goes down as an act of "violence against the person".

Evan Davis interviewed Shadow Home Secretary Chris Grayling about all this. Grayling’s defence was: these are the official figures produced by the Home Office, and even though they come with a warning not to use them for comparisons with before 2002, we can still use them for comparisons with before 2002. Except that he didn’t say the middle bit.

Easton’s report and the interview should be available here at some point today (at about 7.32, so 1 hour 32 mins into the programme), but Easton has explained it all in writing here, with another background piece from last week here.

Tuesday, February 02, 2010

The medical journal which originally published the discredited research linking autism and MMR has now issued a full retraction of the paper. The Lancet said it now accepted claims made by the researchers were "false".It comes after Dr Andrew Wakefield, the lead researcher in the 1998 paper, was ruled last week to have broken research rules by the General Medical Council....Last week, the GMC ruled that Dr Wakefield had shown a "callous disregard" for children and acted "dishonestly" while he carried out his research. It will decide later whether to strike him off the medical register.The regulator only looked at how he acted during the research, not whether the findings were right or wrong - although they have been widely discredited by medical experts across the world in the years since publication.

And a sad reminder, to the media who love a scare story as well as to slapdash scientists, that actions have consequences:

George Monbiot is inviting us to attempt citizen’s arrests on Tony Blair, “for a crime against peace, namely your decision to launch an unprovoked war against Iraq”. He’s offering money, so I expect Cherie will have a go.

The response to this has not been universallypositive (although someone’s already had a go). But Monbiot is undeterred: “you can mock our feeble attempts to hold Tony Blair to account, but only if you propose an alternative”.

OK, here are a few alternatives: have a nice cup of tea; take up knitting; put pretend arrest warrants out on the other 411 MPs who voted for the war; go online and find out what your old school friends are up to; put a pretend arrest warrant out on Blair for his illegal war against Yugoslavia; keep writing the same Guardian column over and over again until you hit retirement; send thank-you notes to Vladimir Putin, Hu Jintao and Jacques Chirac for declining to make the Iraq war was legal by giving it the nod; or eating some ice cream. These would be all be equally successful ways of holding Blair to account.

One other thing you could do would be to read section 24A of the Police and Criminal Evidence Act 1984, which covers the rules on citizen’s arrests [annotated with my own expert legal interpretation]:

Arrest without warrant: other persons

(1) A person other than a constable may arrest without a warrant—(a) anyone who is in the act of committing an indictable offence;(b) anyone whom he has reasonable grounds for suspecting to be committing an indictable offence.[(a) is obviously out, as the war was in the past, and for the same reason so is (b)]

(2) Where an indictable offence has been committed, a person other than a constable may arrest without a warrant—(a) anyone who is guilty of the offence;(b) anyone whom he has reasonable grounds for suspecting to be guilty of it.[No competent body has ruled that any indictable offence has been committed, so (2) is out. That basically stymies the whole idea, but let’s imagine that citizens are allowed to decide what counts as an offence, and carry on]

(3) But the power of summary arrest conferred by subsection (1) or (2) is exercisable only if—(a) the person making the arrest has reasonable grounds for believing that for any of the reasons mentioned in subsection (4) it is necessary to arrest the person in question; and(b) it appears to the person making the arrest that it is not reasonably practicable for a constable to make it instead.[For (a), we’ll have to see below, and (b) is out as Blair is always accompanied by constables who could perfectly well make any necessary arrests. Actually, we could stop here, because the (3) demands that both conditions (a) and (b) be met. But while we’re so near the end…]

(4) The reasons are to prevent the person in question—(a) causing physical injury to himself or any other person;(b) suffering physical injury;(c) causing loss of or damage to property; or(d) making off before a constable can assume responsibility for him.[No, no, no, no. Not even close]

It’s a jolly student jape, but the legal case for performing a citizen’s arrest on Tony Blair is even weaker than the political case. Sorry.

Monday, February 01, 2010

As Chris reports, George Osborne has said: “The overriding objective of fiscal policy must be to provide the credible deficit reduction plan that allows the Bank of England to keep mortgage rates as low as possible for as long as possible.” He’s been pushing this view for a while.

In an intellectually hefty (by his standards) speech in September, Osborne said that “tight fiscal policy will allow the independent MPC to keep interest rates as low as possible for as long as possible while keeping inflation and inflation expectations securely anchored”. He also dealt directly with the argument that significant spending cuts too soon could such demand out of the economy and put the recovery at risk:

Not only does this argument ignore the risks of a loss of confidence and higher interest rates, it is also too simplistic. It ignores the impact of fiscal policy on the exchange rate in an open economy like the UK. Ben Broadbent, Chief UK Economist at Goldman Sachs, wrote recently that fiscal tightening in an open economy "has little appreciable impact on aggregate output" because it tends to rebalance demand away from non-traded goods and services and towards the traded sector. In other words, what you lose in government spending, you gain in exports.

The Goldman paper doesn’t seem to be online, but Stephanie Flanders has summarised its gist:

If the government… announced tighter budget plans starting in 2010, it is possible that the bond markets would reward that government by pushing down long-term interest rates (also known as the interest rate on government debt). That could stimulate the economy in its own right by making it cheaper for companies to borrow. It could also, by reducing the return on sterling investments, push down the pound, giving an extra fillip to exporters.

So, if I understand this right, the tighter fiscal policy that the Tories are planning (as Cameron says, “We're not talking about swingeing cuts”, which I believe to be literally true) will mean that monetary policy can stay looser for longer.

It will also push the value of the pound lower than it would have been, which will help exporters. This will also make imports more expensive, which will drive up inflation. But that will mean higher interest rates, which is exactly what Osborne wants to avoid.

Huh?

Then there’s the effect on the cost of government borrowing. If foreign buyers of UK gilts think that the pound will be lower in the future, then they’ll demand higher yields to make up for this – thus pushing up the cost of public borrowing.

Bill Gross, of fund managers Pimco, has been sounding the most lurid warnings lately about UK public debt and the gilt market. He said last week: “High [UK goverment] debt with the potential to devalue its currency present high risks for bond investors.” He’s in favour of fiscal consolidation, but so that the government doesn’t take on more debt than it can safely service, not in order to get the currency down – quite the opposite, as he seems to imply that a government that cuts its borrowing will be rewarded by a stronger currency.

So do the Tories really want a lower pound? Do they know how to bring it about? Do they want the consequences that flow from it? I confess I struggle to understand the rationale here. Perhaps it’s because I’m a bumbling amateur when it comes to economics and finance. Or perhaps it’s because Osborne is too.